Hungary’s New Government Moves to Abolish Crypto Prison Sentences and Validation Regime in Sweeping Reversal of Orbán-Era Rules

Key Highlights

• Hungary's new government, formed after Péter Magyar's pro-European Tisza Party won the April 2026 elections ending Viktor Orbán's 16-year rule, is scrapping crypto prison sentences of 2 to 8 years introduced under Act LXVII of 2025.
• The mandatory SARA validation certificate system, which covered every crypto-to-fiat and crypto-to-crypto transaction, is being abolished entirely.
• Revolut suspended all crypto services for Hungarian users on 7 July 2025 and fully exited the market by 18 December 2025, after no validators were ever registered under the system.
• The European Commission had opened MiCA infringement proceedings against Hungary, citing the SARA system's incompatibility with EU-wide crypto regulation.
• The new government has explicitly modelled its planned replacement framework on Estonia's FIU-supervised digital licensing system, regarded as one of the most internationally compatible in the EU.
• Government spokesperson Anita Köböl confirmed the reversal on 11 June, stating the previous law made normal market operation impossible and had criminal consequences affecting several hundred thousand people.

Hungary's new government is dismantling one of the most restrictive cryptocurrency regimes ever introduced by an EU member state, scrapping prison sentences and a mandatory validation system put in place under former Prime Minister Viktor Orbán. The reversal follows the April 2026 elections, in which Péter Magyar's pro-European Tisza Party ended Orbán's 16-year rule. Government spokesperson Anita Köböl confirmed the policy change at a press conference on 11 June, stating that the previous legislation had made practical market operation impossible, frightened participants, and carried criminal consequences affecting several hundred thousand people.

What Is Being Scrapped

The framework being dismantled is Act LXVII of 2025, which took effect on 1 July 2025 and amended both Hungary's Criminal Code and its existing crypto-asset market legislation. Under the law, every crypto-to-fiat and crypto-to-crypto transaction was required to pass through a compliance certificate issued by a government-approved validator, overseen by a body called the Supervisory Authority for Regulated Activities, or SARA. Trading through any platform not part of this validation system carried criminal penalties of between 2 and 8 years in prison, depending on the size of the transaction. The new government is removing both the criminal penalties and the validation requirement entirely.

Why the Law Forced Major Platforms to Exit

The practical effect of the law was immediate and severe. Revolut suspended all cryptocurrency services for its Hungarian users on 7 July 2025, freezing customer holdings without prior notice, and fully withdrew from the market by 18 December 2025.

The underlying reason for this exodus is structural rather than a matter of platform reluctance. At the point the criminal provisions took effect, SARA had not registered a single authorised validator. This meant that, from a strict legal standpoint, every cryptocurrency transaction in Hungary became technically illegal the moment the law activated, regardless of the platform involved or its compliance intentions. No major international exchange or platform could continue operating under conditions where compliance was structurally impossible — which is precisely why Revolut and others chose to exit rather than risk criminal liability for their users and staff.

The EU Pressure Behind the Timing

The reversal is not solely a matter of domestic political change. The European Commission had already opened formal infringement proceedings against Hungary's validation regime, on the grounds that it directly conflicted with MiCA — the EU's harmonised Markets in Crypto-Assets framework, which sets a single regulatory baseline across all member states. MiCA's design does not permit individual countries to layer additional national gatekeeping systems on top of EU-wide licensing, and Hungary's SARA system did exactly that.

For a new government seeking to signal full alignment with the EU, resolving these infringement proceedings carried both legal urgency and political value. Administratively withdrawing the SARA system is a faster path to compliance than pursuing full legislative reform through parliament. The Magyar government has been explicit that it intends to model Hungary's replacement framework on Estonia's approach — a single-window digital licensing system supervised by Estonia's Financial Intelligence Unit, widely regarded as one of the most internationally compatible crypto licensing models within the EU.

What Comes Next

Hungary's reversal provides a clear real-world example of what happens when a member state implements a national crypto framework that directly conflicts with MiCA and subsequently experiences a change in government. In this case, the result has been rapid dismantling, driven by a combination of EU enforcement pressure, the departure of major platforms from the market, and electoral accountability for the law's practical consequences.

For platforms that exited Hungary during 2025 — including Revolut — the specific conditions that forced their departure, namely the SARA validation layer and the criminal penalties, are now being removed. The more significant open question is how re-entry takes shape: whether platforms choose to rebuild dedicated domestic infrastructure in Hungary, or instead re-enter the market through passporting under MiCA licences they already hold elsewhere in the EU, a pathway the regulation enables without requiring additional national-level licensing.

The Estonia comparison invoked by the Magyar government is a deliberate one. Estonia built its reputation in the crypto sector through low-friction licensing, full MiCA alignment, and strong institutional credibility. Hungary is now attempting to reach a similar position not through gradual reform, but through a full reversal — starting from what had become one of the most restrictive regulatory positions of any EU member state.